Restrictive covenants — Construction — Recreational purposes — Section 237 Town and Country Planning Act 1990 — Whether use of football club stadium breach of covenant against use other than for recreational purposes — Whether restrictive covenant against use overridden by section 237
By a deed of exchange dated 31 March 1993, which
was made pursuant to an agreement of the same date: (1) the plaintiff
transferred to the first defendant council an area of land (the green land);
(2) the council transferred to the plaintiff an area of land (the orange land);
and (3) the council covenanted, for the benefit and protection of the orange
land, that they, and those deriving title under them, would not, during a
restrictive period, use or permit or suffer to be used the green land or any part
or parts thereof, otherwise than for highway or recreational or ancillary
purposes. In 1986 the council obtained planning permission for land, including
the green land, for a number of purposes, including recreational. In March 1996
the council appropriated land, including the green land, to planning purposes
and agreed the use of powers under section 237 of the Town and Country Planning
Act 1990 to override the restrictive covenant affecting this land. On 6 August
1996 the council granted a lease of part of the green land to the second
defendant football club in consideration of the club erecting a stadium and
other ancillary buildings, paying a premium and substantial rents. On 9 August
1996 the council granted planning permission to the club to erect the stadium
with ancillary facilities, car parking spaces and roadworks. The plaintiff
sought declarations to the effect that, inter alia, the construction
and/or use of the stadium and other works would be a breach of the restrictive
covenant affecting the green land, and that section 237 of the Town and Country
Planning Act 1990 could not be relied upon to override the restrictive
covenant.
breach of the covenant. In the context in which the restrictive covenant was
entered into, the words ‘recreational purposes’ are not be construed widely.
Building on a larger scale than that contemplated by the 1986 planning
permission would be in breach of the restrictive covenant. The commercial
exploitation of football is not itself a recreational purpose. (2) The
operation of a football stadium, once constructed, could not be identified as
the execution of works; it is the use of the works that have been constructed.
Injurious affection so caused does not attract compensation under section 10 of
the Compulsory Purchase Act 1965. Section 237 of the 1990 Act does not
authorise a use in contravention of the restrictive covenant.
The following cases were
referred to in this report.
Attorney General for New South Wales v Cooma Municipal Council [1962] NSWSR 663
Ayr Harbour Trustees v Oswald (1883) 8 App Cas 623
Brown v Heathlands
Mental Health NHS Trust [1996] 1 All ER 133, Ch
Cadogan v Royal
Brompton Hospital NHS Trust [1996] 2 EGLR 115; [1996] 37 EG 142
Cowper Essex v Acton
Local Board (1889) 14 App Cas 153
Credit Suisse v Allerdale
Borough Council [1995] 1 Lloyd’s Rep 315; (1995) 159 LG Rev 549, QB
Fletcher v Birkenhead
Corporation [1907] 1 KB 205
Hammersmith and City Railway Co v Brand (1869) LR 4 HL 171
Kirby v School
Board for Harrogate [1896] 1 Ch 437, CA
Long Eaton Recreation Grounds Co v Midland Railway Co [1902] 2 KB 574
Manchester, Sheffield & Lincolnshire Ry v Anderson [1898] 2 Ch 394
R v City of
London Council, ex parte Master Governors and Commonality of the Mystery of the
Barbers of London (1997) 73 P&CR 59; [1996] 2 EGLR 128; [1996] 42 EG
156; [1996] JPL B125, QB
Simeon, In re; Isle of Wight Rural District
Council, In re [1937] Ch 525
6, 8, 10 and 12 Elm Avenue, New Milton, In
re, ex parte New Forest District Council [1984] 1
WLR 1398; [1984] 3 All ER 632; (1984) 48 P&CR 381; 83 LGR 87, Ch
Stourcliffe Estates Co v Bournemouth Corporation [1910] 2 Ch 12
Tate & Lyle Food & Distribution Ltd v Greater London Council, sub nom Tate & Lyle Industries Ltd
v Greater London Council [1983] 2 AC 509; [1983] 2 WLR 649; [1983] 1 All
ER 1159; [1983] 2 Lloyd’s Rep 117; (1983) 46 P&CR 243, HL
Wrotham Park Settled Estates v Hertsmere Borough Council [1993] 2 EGLR 15; [1993] 27 EG
124; [1993] RVR 56, CA
This was an application
by originating summons by the plaintiff, Thames Water Utilities Ltd, for
declaratory relief in proceedings against the defendants, Oxford City Council
and Oxford United Football Club Ltd.
Terence Etherton QC and Jonathan Seitler (instructed
by Ashurst Morris Crisp) appeared for the plaintiff; Alexander Hill-Smith
(instructed by the solicitor to Oxford City Council and Cox Clitheroe)
represented the first and second defendants.
Giving judgment, JUDGE RICH QC said: By a lease dated 23 June 1978, the
defendant council had demised to the plaintiff’s predecessor authority certain
land at Blackbird Leys Farm for a term of years expiring in September 2037. On
24 May 1984 the council obtained a planning permission over land that included
part of the land demised, for development in accordance with their application,
which was described as follows:
Outline application for 14.6 hectares of housing
(approximately 1200 dwellings) with community facilities including first
school, shops, meeting hall and public house. 10.5 hectares of landscaped open
space. 21.4 hectares of recreation land, which could include pitches, cricket
green and golf course. 11.3 hectares of industrial land. Development to be
served by new peripheral road between B480 and A423 at land south of Blackbird
Leys, Minchery Farm and Littlemore, Oxford between the Watlington Road (B480)
and A423 Littlemore/Sandford/Garsington.
A plan accompanying the permission indicated the
broad location of the different users described in the separated sentences.
Being an outline permission it was subject, among others, to a condition at
para 2(1) of the schedule, namely that the layout of any part of the site to be
developed, including roads and buildings, number of buildings, access to that
part of the site and buildings and surface water drainage were to be submitted
to, and approved in writing by, the local planning authority before development
was commenced. Nevertheless, the permission granted in respect of the site as a
whole did not, in my
might be ancillary to the use of the 21.4ha of recreational land for open-space
recreation such as was referred to in the description of the permitted
development. Any greater building works would require a further permission, as
opposed to mere approval under the permission.
By an agreement dated 31 March 1993 between the
council and the plaintiff (then called Thames), it was agreed at clause 2.3:
In order to further facilitate the development the
council and Thames have agreed inter alia that:
2.3.1 Thames will —
2.3.1.1 surrender to the council by operation of
law its leasehold interest in the green land and other land.
The lands there described are shown on a plan
attached to the agreement. The green land effectively coincides with the
recreational land shown on the planning permission. It was further provided at
clause 2.3.2.2 that the council would enter into a restrictive covenant not
‘during the restricted period to use (a) the green land or any part otherwise
than for recreational and ancillary purposes’. Other restrictive covenants were
applied to the other pieces of land referred to in the agreement.
The restricted period was the period to the expiry
of the term of the lease that was to be surrendered. The agreement then
provided for the documentation of an exchange of land, including the transfer
to Thames of the freehold of some orange land. Clause 8 provided, under the
head ‘Equality of Exchange’:
The mutual release of the parties’ obligations
under the lease in respect of the green land and the blue land and a transfer
of the orange land and the brown land and the imposition of restrictive
covenants shall be in the form of the documents annexed hereto which will be prepared
by Thames’ solicitors and executed in duplicate and completed on the completion
date (as to which time is of the essence) when the council shall pay to Thames
the sum of £1,500,000…
— there is then in brackets ‘exclusive of value
added tax’, but those words have been struck out —
by way of equality for the exchange of the
parties’ interests in the various properties the subject of this agreement.
8.2 Thames shall not be bound to complete the
documents referred to above until it has received payment of all sums payable
by the council pursuant to the terms of this agreement at the time and in the
manner specified by this agreement.
Thus, the deed of exchange, to which I will next
refer, was executed as part of the larger transaction, as was agreed in the
agreement, only after the payment of the £1.5m in respect of which the
provisions as to VAT had been struck out. Thus, the VAT invoice, which
documented the payment, is, in my judgment, part of the same transaction also
and may be prayed in aid to construe the other documents. That invoice showed
that different parts of the total site had had attributed to them different
sums: the blue land, a sum of £1.481m; the green land, an amount of £100,000
(in each case exclusive of VAT). The orange land, which was to be transferred
by the council to Thames, was likewise given a total value of £100,000. It is
broadly an area comparable to the area of the green land.
On behalf of the plaintiff, Margaret Wray has
deposed that the invoice apportions the £1.5m. It records, she says, the amount
payable for the blue land as £1.481m plus VAT. The site area of the green land
was 53 acres, giving a value of £1,886.79 (plus VAT) per acre. The site area of
the blue land was 30.5 acres, giving a value of £48,557.38 plus VAT per acre.
Those I take to be facts that are part of the background material capable of
being taken into account in the construction of the documents. She goes on to
say in her affidavit that the difference in value represents the fact that the
blue land was to be used by the first defendants free from any restrictions,
whereas the green land was to be subject to the restrictive covenant. I think
that it is a proper inference, at least, that the difference in price
represents the difference in development value, but I do not think that I am
entitled to take into account the deponent’s view as to the reason for the
difference, save in so far as it can be inferred from the documents.
The deed of exchange was executed also on 31 March
1993. It is expressed to have been made in pursuance of the terms of the main
agreement and in consideration of the terms thereof, including the transfers
hereinafter contained and of the sum of £1.5m. Its definition clause includes a
definition of the word ‘development’, which is the same as in the agreement —
that is to say the development permitted by the 1986 agreement which the
exchange of land was said by the agreement to facilitate. However, the
agreement itself makes no further use of that word but, since it is made in
pursuance of the terms of the main agreement, it is, in my judgment, to be
construed as likewise for that purpose.
The deed of exchange contains a covenant by
Thames, said to be for the benefit of the land, the subject of the transfer,
for surrender to the council, not to use the orange land otherwise than for
purposes set out in clauses 4.11 and 4.12. Those are agricultural and ancillary
purposes and for sludge-spreading, providing however that on the area of the
orange land, which is within 200m from the boundaries of the blue land, any
such sludge-spreading is carried out only with digested sludge and that the
digested sludge is ploughed in on the same day that it is spread. The
restriction on the manner of sludge-spreading may well be said to be for the
protection of the council’s lands, but it is difficult to imagine how a
covenant not to use otherwise than for sludge-spreading can be so described.
By clause 4.3:
The council for its part, so as to bind the green
land, the red land and the yellow land in whosoever’s hands the same may come,
and so that the covenant shall be for the benefit and protection of the orange
land and any part or parts thereof hereby covenant with Thames that the council
and those deriving title from or under it will not during the restrictive
period use or permit or suffer to be used
4.3.1 the green land or any part or parts thereof
otherwise than for highway or recreational and ancillary purposes. [The
covenants in respect of the red and yellow land are respectively for
recreational and ancillary purposes or community land with ancillary facilities
and for recreational and ancillary purposes or for housing and ancillary
purposes.]
Again I comment that it is difficult to see how
these covenants may be said to enhance or protect Thames’ enjoyment of the
agricultural and sludge-spreading orange land for whose benefit or protection
it is said to have been taken.
It seems to me to be a necessary inference that
these mutual covenants were in reality intended to give to each party a right
to restrain development of the other’s land, not for the purpose of the
enjoyment of their own land so much as for the purpose of restraining
development more valuable than had been the basis of valuation on the exchange
of lands in accordance with the agreement. It is, in my judgment, in that light
that the covenant in clause 4.3.1 must be construed.
In case such covenants properly construed might
inhibit the use of the green land, the council resolved in March 1996 to accept
a recommendation as follows:
That the Estates Committee and Planning Committee
agree that the Oxford United Stadium and adjoining leisure and employment sites
shown on the attached plan are appropriated to planning purposes. [The sites
are part of the green land.]
(b) The Planning Committee agrees the use of
powers contained in section 237 of the Town and Country Planning Act 1990 to
override the restrictive covenant on this land if necessary.
Thereafter, on 6 August 1996, the council granted
a lease of part of the green land to the second defendants in consideration, inter
alia, of the covenant to build a stadium thereon and to pay both a premium
of £900,000 and substantial rents. On 9 August the council, which had in 1991
(that is between the 1986 planning permission and the 1993 agreement) become
the planning authority in respect of the land, granted to the second defendant
a planning permission for development described as:
Erection of 15,000 seater stadium with ancillary
facilities including supporters club, health and fitness centre and restaurant.
Provision of 895 car parking spaces around stadium, 525 remote parking spaces
north of brook and 530 car parking spaces on land designated for leisure and
employment use, access from Grenoble(?) Road roundabout and other road works.
By an amended originating summons the plaintiff
seeks declarations as follows: first, a declaration that, upon the proper
construction of the agreement dated 31 March 1993 and the deed of exchange
dated 31
defendants, and upon the proper construction of section 237 of the Town and
Country Planning Act, the first defendants are not entitled to use or permit or
suffer to be used the land defined in the agreement and deed of exchange as the
green land or any part of it otherwise than for highway, recreational and
ancillary purposes during the restricted period; and second, a declaration that
upon the proper construction of the 1993 agreement and deed of exchange, the
following would be in breach of the restrictive covenants: (a) the erection
and/or use of the green land of the 15,000 football stadium with ancillary
facilities, including supporters club, health and fitness centre, restaurant
and car parking; or, alternatively, (b) carrying out on the green land works
for the building of premises to be used as, or the use of premises on the green
land for: (1) health and fitness centre; (2) a restaurant; (3) a conference and
seminar centre; (4) offices (in so far as they are not for the administration
of the football club); (5) a hotel; (6) a bingo hall; (7) a cinema; and (8) a
petrol station.
The amendment added a paragraph to (a): further or
alternatively (a) a declaration that the defendants are not entitled to rely
upon section 237 as authorising any such work on or user of the green land as
is mentioned in para (2) above; (b) a declaration that the erection of housing
on the green land and the occupation thereof amounts to a breach of the
restrictive covenant and that the defendants are not entitled to rely on
section 237 as authorising any such works on, or user of, the green land.
The declaration under para 2(A)(b) as to the
erection of housing has not, in fact, been canvassed before me. Mr Alexander
Hill-Smith, for the defendants, accepts that it would involve a breach of the
covenant, which I have recited, and that the entitlement to rely on section 237
will be determined on the same basis as in respect of the football stadium use.
The amendments to which I have referred were made
by agreement on the basis that the issue raised by them should be set out in a
letter. That letter identified, as the issue so raised, whether the defendants
are precluded from relying upon section 237 by virtue of estoppel and/or ultra
vires in circumstances where the first defendants had themselves granted
the covenant. This case was not elaborated or supported by affidavit and Mr
Terence Etherton’s skeleton argument adumbrated an argument based on an implied
term rather than estoppel or ultra vires. In the circumstances, I
directed that some particularisation be given overnight after the first day of
the hearing. For reasons of convenience and shortage of time in respect of an
expedited hearing, I have not, in fact, heard full argument on the effect that
the circumstances under which the covenant came to be granted may affect the
defendant’s entitlement to invoke statutory powers. This judgment is therefore
directed only to the construction of the agreement and of section 237, as
raised in paras (1) and (2) of the originating summons.
Construction of the covenant
The expression ‘recreational and ancillary
purposes’ may be extremely wide in its scope and meaning. I have been referred
to an Australian case Attorney General for New South Wales v Cooma
Municipal Council [1962] NSWSR 663, and to Credit Suisse v Allerdale
Borough Council [1995] 1 Lloyd’s Rep 315. In the latter case Colman J cited
the Shorter Oxford English Dictionary definition of ‘recreation’ as including
the ‘action of recreating (oneself or another) or fact of being recreated by
some pleasant occupation, pastime or amusement’.
Having regard to the context, the wide range of
uses classified as not involving development in Class D(2) of the Town and
Country Planning (Use Classes) Order 1987 might also be claimed, as Mr
Hill-Smith suggests, to be of relevance. I, however, have no doubt that, while
watching football may be a recreational activity within such meaning and that
playing it professionally could not even on such wide definition be construed
as being so, these are not the determinative bases for construing this
covenant.
Having regard to the context in which this
covenant was entered into, I do not think that the words ‘recreational purpose’
are to be construed widely. A reasonable bystander, knowing the facts of the
transaction and the purpose of the exchange of covenants as declared in the
agreement and apparent from the deed, would look for some limitation on the
widest meaning of the words employed. I accept that a vendor who wishes to
restrict a purchaser’s right to use land by imposing a restrictive covenant,
must, if he is to protect himself, choose adequate words. That does not,
however, mean that the intention of the parties, as made plain by the totality
of the relevant documentation, is to be disregarded. It is apparent that the
purpose of the restriction was to reflect the limited use to which the area
could be put by virtue of the extant planning permission of 1986. The land
might be developed otherwise than in accordance with that planning permission,
but the limitation of use on each area distinguishes the housing and community
facilities areas from the recreational area.
The scope of the permission may be a matter of
debate, but that is often the case with a user covenant: for example, the scope
of the covenant against trade or business often attracts argument. At the
extreme, however, such as is, I think, raised by the proposals in this case, it
is easy to recognise what would involve a breach of the covenant so construed.
As I construe the planning permission, it would not exclude all built
development, but it does not include permission for major buildings, even if
their function is recreational, as opposed to the erection of buildings ancillary
to the recreational use of the land for open-air recreation. This is, in my
judgment, made clear by the illustrative kinds of recreation which the planning
permission refers to as being envisaged on the recreational land: pitches,
cricket green and golf course.
In my judgment, building so limited is what was
meant in the agreement and the deed of exchange by use of the land for
recreational and ancillary purposes. Building on a larger scale would
therefore, in my judgment, be in breach of the covenant properly construed. My
reliance on the planning permission as an aid to the construction of the
covenant does not mean that an approval must, in fact, be obtained under the
planning permission in order to satisfy the covenant. It means only that the
use should not go so far beyond what was envisaged in the planning permission
as to need a new planning permission. In my judgment, the erection of a 15,000
seater stadium clearly goes beyond this.
This construction of the covenant would not
preclude the charging of money for the use of the land for recreational
activity either by the local authority or by, for example, a club engaged in
such activity. The uses described in para 2 of the originating summons,
however, are not intended to be uses by the second defendant as lessee of the
land in order to provide recreation for the second defendant. The second
defendant’s intention must, in my judgment, be relevant because there is no
doubt that it will be the second defendant which is making use of the land if
the proposals are carried out. The second defendant is proposing to occupy and
use the stadium in order to accommodate, inter alia, professional
football matches at which spectators will, arguably, ‘recreate themselves’ by
watching. It may be said that such use is therefore in part for the
recreational purpose of the spectators. But the covenant is not to use the land
otherwise than for a recreational or ancillary purpose. The commercial
exploitation of the game of football by hiring players and charging spectators
is not itself a recreational purpose. Nor is it merely ancillary to the
recreational purpose of the spectators. In my judgment, for these reasons, the
uses contemplated involve a breach of the covenant.
The more difficult question is whether, on a true construction
of section 237 of the Town and Country Planning Act 1990, there is a breach
that is authorised as a result of the appropriation of this land for planning
purposes. I think that it is helpful to set this issue in its context. Although
formally the originating summons seeks an injunction, it is not that claim that
comes on for expedited hearing. It is the issues that I have identified that
have, by consent, been set down for trial as preliminary issues. This is, I
have no doubt, because the real issue is how much the defendants should pay for
release of the covenants in so far as their proposed development involves
breaches of the covenants not authorised by section 237. Section 237 provides
for compensation. The matters to be compensated, if section 237 does apply, are
in issue and I shall discuss them. But it is not in dispute that the basis of
assessment of compensation for injurious affection consisting of development in
breach of covenant is to be determined as set out in Wrotham Park Settled Estates
v Hertsmere Borough Council [1993] 2 EGLR 15*, that is the diminution in
value of the dominant tenement arising from the breach of covenant.
*Editor’s note: Also reported at [1993] 27 EG 124
The plaintiff’s orange land will not, I suspect,
be damaged one jot by any development on the green land. What the plaintiff
will have lost, if the defendants are authorised to carry out their proposed
work on payment of compensation so determined, is the opportunity to extort (if
that is not too emotive a word) a share of the development value for relaxing
the covenant.
In the light of the history of the covenant it may
seem that justice should favour preserving that opportunity. If it does it
must, however, be by the route that those circumstances in some way affect the
council’s right to rely on section 237 as properly construed — the issue that
presently stands adjourned. The true meaning of section 237 must be arrived at
without such consideration. It is a feature of compensation for injurious
affection that it does leave uncompensated a number of losses that arise in
different cases. Temporary loss and loss of profit are among those that have
been held to be excluded from the ambit of compensation for injurious
affection.
I must approach the point of construction of
section 237 on the basis that Sir Thomas Bingham MR indicated in the Wrotham
Park case, where he said at p17M:
For my part, it does not greatly concern me if it
be the case that the landowner does not receive perfect compensation so long as
he is compensated for any diminution that he can demonstrate in the value of
his remaining estate. If a landowner in such a position is required to make
some sacrifice in the wider communal interests represented by the local
authority, then it would seem to me that that is a sacrifice which falls very
far short of anything which could be called extortion.
If the local authority consider that the wider
public interests require the provision of a football stadium for Oxford United
Football Club, and section 237 applies, the plaintiff must suffer the
sacrifice.
Construction of section 237
Mr Etherton’s submission, as adumbrated in his
skeleton argument, was simple. He said at paras 25 and 26:
Section 237 empowers a local authority among other
things to override a restrictive covenant to enable the work specified in
section 237 to be carried out, namely: ‘The erection, construction or carrying
out or maintenance of any building or work on land’.
Section 237 does not empower a local authority to
override a restrictive covenant restricting use of the land otherwise than in
respect of the works expressly mentioned in subsection (1) of section 237. This
is reflected in the terms of subsection (7) and in the limited scope of the
compensation provisions of section 10 of the Compulsory Purchase Act 1965,
re-enacting section 68 of the Lands Clauses Consolidation Act 1845 under which
compensation cannot be claimed for injurious affection arising from use as
distinguished from the execution of works.
He then referred to the Encyclopedia of
Compulsory Purchase. He says in his skeleton argument that it follows that
if the plaintiff’s construction of the restrictive covenant is correct then the
passing by the first defendants of a resolution under section 237 did not and
does not enable the green land to be used, as distinct from the carrying out of
works and construction for purely private commercial profit in any of the ways
mentioned in para 2 of the amended originating summons or for housing as
mentioned in para 2(a).
On hearing that submission, I raised the question
as to whether there was not a general power of statutory authorities to act in
disregard of a restrictive covenant in the exercise of their statutory powers.
That has led, I fear, to a considerable excursion as to the basis and limits of
that principle. Mr Hill-Smith introduced the court to what appears to me to be
a most useful and thorough work called Land Covenants, published in 1996
by Professor Scammel. This makes a useful starting place to consider the
principles involved. Mr Hill-Smith adopts Professor Scammel’s arguments. At
p185 of his work Professor Scammel says:
Before considering the points covered in the
numbered paragraphs below, it should be pointed out that in relation to
restrictive covenants the position of an acquiring body which has powers of
compulsory acquisition is the same whether those powers are actually invoked or
whether the land in question is acquired for the statutory purpose by voluntary
agreement.
For that proposition he cites two authorities to
which I will refer in detail in due course, Kirby v School Board for
Harrogate [1896] 1 Ch 437, and Brown v Heathlands Mental Health
NHS Trust [1996] 1 All ER 133. The proposition that he advances in that
paragraph is, however, common ground before this court, although the precise
effect of appropriation for planning purposes, as opposed to acquisition by
agreement, is the matter to which I must return after seeking to set out the
more general principles with which Professor Scammel deals in his numbered
paragraphs.
In the first of his numbered paragraphs he makes
the point that compulsory acquisition of the burden of land has no immediate
effect on the continued existence of restrictive covenants. This again is
agreed. It is the enforceability of the covenants that may be affected either
by the purchase or the other exercise of powers.
Professor Scammel then addresses the very problem
raised by Mr Etherton’s argument. The passage is headed ‘The extent of
permitted non-compliance‘. He says:
Under this heading, there are two questions to be
considered:
(a) does the permitted non-compliance extend not
only to the carrying out of works on the land but also to a use
of the land which is prohibited by the covenant?
(b) does any particular non-compliance fall
within the scope of a given statutory purpose?
(A) Is A Non-Conforming Use Permitted?
Prima facie, it might be thought that if the
statutory purpose consists of the construction of works and their subsequent
use then both the construction and the use would be permitted in defiance of a
restrictive covenant which prohibited them. But difficulty arises because of
the linking in Kirby v School Board for Harrogate and Long
Eaton Recreational Grounds Co v Midland Rly Co [1902] 2 KB 574 of
the permitted non-compliance with the availability of compensation under
section 68 of the 1845 Act, the strong implication being that if compensation were
not available under section 68 in respect of a given non-compliance then that
non-compliance would not be authorised. In each of those cases, the
non-compliance complained of consisted of the carrying out of works of
construction rather than the subsequent use of the works when constructed, and
a right to compensation in such a case was clearly provided for by section 68.
Until the decision of Luxmoore J in Re Simeon and Isle of Wight RDC
[1937] Ch 525, however, it was by no means clear whether a similar right to
compensation existed where the non-compliance complained of consisted of a
prohibited use. Prior to this decision, the Court of Appeal had held in Fletcher
v Birkenhead Corporation [1907] 1 KB 205 that compensation was payable
under section 6 of the Waterworks Clauses Act 1847 to persons ‘injuriously
affected by the construction or maintenance of the works thereby authorised’
not only in respect of the construction of the works but also in respect of the
subsequent use of the works, on the ground that the word ‘maintenance’ went
beyond ‘construction’ and was wide enough to embrace subsequent user. In the Simeon
case, which was concerned with section 68 of the 1845 Act (which provides for
compensation to persons whose interest in land is ‘injuriously affected by the
execution of the works’), Luxmoore J applied the same robust
words of the section were wide enough to include not only the construction of
the works but also the use of those works. In the course of his judgment,
Luxmoore J said:
‘The words of section 68 of the Lands Clauses
Consolidation Act are not, as in the case of section 6 of the Railways Clauses
Act, ‘construction of the works’ but ‘execution of the works’. In my judgment
the latter words are wider than the former and include the exercise, that is
the carrying out and the execution of the appropriate statutory powers.’
In the context of such compensation being
available for non-enforceability in respect of the use of land acquired
pursuant (or against the background of) statutory powers as well as in respect
of works of construction on such land and, consequentially, of the acquiring
body being free to disregard a user restriction, it may be added that in the case
of Re 6, 8, 10 and 12 Elm Avenue, New Milton [1984] 1 WLR 1398, Scott J
expressed the view that the exercise by the New Forest District Council of its
statutory power to acquire land for the purposes of a car park, whilst not
extinguishing restrictive covenants to which the land was subject, left the
persons entitled to the benefit of the covenants to claim compensation in
respect of the user of the land as a car park (to the exclusion of any
other remedy). In the course of his judgment, Scott J, after referring to the Kirby
and Long Eaton cases (but not the Fletcher or the Simeon
cases) said:
‘Those authorities provide, in my view, clear
support for the proposition that notwithstanding that in the present case the
acquisition by the Lymington Borough Council of the land in question was not
effected by compulsory process but by agreement, none the less the benefit of
the restrictive covenants cannot stand in the way of the use of those
properties by the council for the statutory purposes for which they were
required.’
Against the background of the above cases it has
recently been affirmed that the words ‘construction or maintenance of the
works’ and ‘execution of the works’ respectively, extend to the entire package
of activities necessarily or incidentally involved in the exercise of the
statutory powers and, in particular, the use of the land for statutory
purposes.
He then refers to Brown v Heathlands
Mental Health NHS Trust.
I find that long passage from the work of
Professor Scammel extremely helpful as a starting point for my analysis as to
whether or not he has correctly stated the law. I accept that in the Kirby
case the linkage to which the Professor refers was made. In Long Eaton
Recreation Grounds Co v Midland Railway Co [1902] 2 KB 574 it was
decided that the breach of the restrictive covenant against building may be
ground for compensation under section 68. He is, in fact, wrong to say that the
non-compliance complained of in the Kirby case consisted only of the
carrying out of works of construction. As appears at p437 of the report the
land was conveyed to one Fox, and Fox covenanted with the trustees that no
buildings, except bay windows and porches, should, without consent in writing
of the trustees, be erected within 30 ft of the northern boundary — that is the
covenant against building — and that no noisome or offensive trade or calling
should be carried on upon the plot of land. That was a covenant against user.
The defendants wished to erect and carry on a school and the judges assumed, without
necessarily deciding, that that would involve a breach of either or both of
those covenants. In spite of that assumption, none of them addressed the
question of whether section 68 gave compensation in respect of the use of a
building separately from its construction. The issue as formulated was whether
section 68 applied to the exercise of powers in respect of land acquired by
agreement. It is right to say that it is following his conclusion that section
68 did so apply that Lindley LJ said at p449:
It follows [from his conclusion as to the
application of section 68] that the school board are perfectly right in
contending that an action for an injunction or damages is out of the question.
If the plaintiffs can make out that they are injuriously affected, they will be
entitled to compensation under s 68 of the Lands Clauses Act.
That second sentence, however, I think notes the
possibility that even although section 68 might apply, there might be no
compensation because no injurious affection within the section was in the event
established.
Two years later Lindley LJ gave judgment in Manchester,
Sheffield & Lincolnshire Ry v Anderson [1898] 2 Ch 394. In that
case, the railway company had bought the reversion of a house subject to a
lease. On claiming rent, the tenant counterclaimed for breach of the covenant
for quiet enjoyment resulting from the exercise of the company’s statutory
powers. Lindley LJ there distinguished covenants that are rendered
unenforceable by statutory powers, except by claims for compensation, from
those not so affected. At p400 he made the distinction thus:
Let us see what is the effect of the covenant for
quiet enjoyment upon the railway company. They have bought the reversion, and,
like other assignees of a reversion, they are bound by the covenant, for it
runs with the land. I do not see any reason for holding that the covenant has
gone, or in any way been extinguished. The company must be bound like any other
assignee of a reversion — it is not a question of obligation on the company,
but a question of remedy. When we consider the remedy I fail to see the answer
to the contention of the railway company. They say, ‘You cannot bring an action
against us on the covenant or otherwise for anything we are doing lawfully
under our statutory authority.’ It is said that then the covenant is of no use
to the defendant; but it is of very considerable use to him, for it may give
him rights of compensation which otherwise he might not have. He may be able to
prove, having regard to his covenant, that his land is injuriously affected
when he could not prove it if he had no such covenant. Suppose, for instance,
that this is a house less than twenty years old, and suppose the railway
company had not bought the reversion, and that they made an excavation which
let the house down, it is possible that letting it down would be no actionable
wrong. But that could not possibly be the case where the company are bound by a
covenant of this kind, because whether the house was new or old the assignee of
the reversion could not lawfully let it down except under their statutory
powers. The covenant, therefore, is by no means inoperative: It binds the
company just as it would bind any one else. But when you come to the question
of the remedy for an infringement of the covenant, you must look at the Act of
Parliament. There may be other covenants binding on the company for breach of
which an action might well lie, because a breach of them could not be
attributable to the execution of the works authorized by the statute. Suppose,
for example, there were a covenant by the lessor to keep the place insured. A
breach of that covenant could not arise from the construction of the works
under the Act. An action would lie against a railway company for the breach of
a covenant like that, but for any breach of covenant that is authorized by the
Act of Parliament there is no remedy at all except under the compensation
clauses.
The same reference to the precise terms of the Act
enabled the court to decide in Stourcliffe Estates Co v Bournemouth
Corporation [1910] 2 Ch 12, that the covenant in that case was not rendered
void by the availability of statutory powers. The headnote reads:
When a corporation purchases land by agreement
for any of the purposes for which it is authorized to acquire land by the
Public Health or other public Acts, or by its special local Acts, it is not
ultra vires for the corporation to enter into covenants with the vendor
restricting the erection of buildings upon the land purchased which it might
erect under other powers given to it for the benefit of the public, provided
that such restrictions do not prevent the user of the land for the particular
purposes for which it was acquired.
Parker J referred in that case to three cases
including the well-known decision in Ayr Harbour Trustees v Oswald
(1883) 8 App Cas 623, where covenants had been held to be void. He then said at
p15:
In each of these cases the grant or contract
precluded the purchaser from using the land for the purposes or some or one of
the purposes for which the Legislature said it might be acquired and to which
it was in fact dedicated by statute. I have come to the conclusion that the
principle involved in the three cases referred to is not really applicable to
the covenant in the present case. The land in question was not specified in any
Act of Parliament as land which the corporation might acquire for any defined
purposes, and the covenant did not in any way preclude the corporation from
using the land for the purposes or any of the purposes for which it was in fact
acquired, but merely precluded them from exercising with regard to such land
certain ancillary and subsidiary powers with which they had been entrusted by
the Legislature, but the exercise of which is not imperative for the purposes for
which the land was acquired, but permissive only.
For these reasons the claim for an injunction
restraining construction for the erection of a urinal in a public park,
contrary to the covenant, succeeded. Although the defence was put in somewhat
different form at first instance, before the Court of Appeal it appears that Kirby
was cited. The Court of Appeal upheld Parker J, although it made no reference
to
acceptance of the coincidence of the scope of the principle in that case with
the other decision. The principle in Kirby was specifically referred to
by reference to Manchester Sheffield by Luxmoore J in In Re Simeon
[1937] Ch 525, upon which Professor Scammel relies as to the availability of
compensation under section 68 for injurious affection caused by the use of
land. In that case at p535 Luxmoore J said:
It is, I think, settled law that in all cases
where land is subject to a burden which runs with it for the benefit of other land,
a purchaser taking under compulsory powers takes the land subject to that
burden like any other purchaser; but the covenant cannot be enforced by
injunction in the Courts if the breach of it is attributable to the execution
of the works authorized by the statute under which it was taken, or to the
exercise of the statutory powers thereby conferred on the purchaser.
It may well be that the conclusion reached in that
case as to the scope of compensation under section 68, to which I must return,
was affected by his consciousness of the effect of that rule. It does not,
however, follow that the rights for which compensation had been awarded in the
award which Luxmoore J was reviewing, could have been exercised otherwise if
his decision as to the availability of compensation had been different.
I do not think that the decision of Scott J in In
re 6, 8, 10 & 12 Elm Avenue, New Milton, ex parte New Forest District
Council [1984] 1 WLR 1398 depended on any conclusion as to the availability
of compensation. The headnote reads:
Pursuant to the provisions of the Local
Government Act 1933 and the Road Traffic Regulation Act 1967 the applicant’s
predecessor, Lymington Borough Council, acquired four properties in Elm Avenue,
New Milton, for the purpose of providing additional car parking facilities in
the area. The properties were purchased subject to restrictive covenants
imposed by three conveyances made in about 1920. Those conveyances contained
covenants imposing a common building line, requiring the erection and
maintenance of fences and requiring, by paragraph 4, that ‘No trade or
business’ should be carried on . . . No work of construction had been
commenced, but the applicant wished to proceed with the construction of the car
park, the need for which had become greater over the years, and accordingly
applied for declarations that the properties in question were no longer
affected by the restrictive covenants imposed by the 1920’s conveyances, or
alternatively that the construction of a public car park would not constitute a
breach thereof, or that the restrictions were not enforceable to the extent
that they would prohibit or restrict the construction of a public car park.
Held, (1) that
although the properties had been acquired by agreement and not by way of
compulsory purchase, the restrictive covenants could not be asserted so as to
prevent their use for the statutory purpose for which they had been acquired or
for some other statutory purpose; but that since the acquisition of land for a statutory
purpose did not ipso facto discharge or render restrictive covenants
unenforceable, those entitled to the benefit of them could claim compensation
subject to the provisions of section 10 of the Compulsory Purchase Act 1965;
and that, accordingly, the applicant was entitled to a declaration that the
restrictive covenants were unenforceable to the extent that they prohibited the
construction of a public car park . . .
Reference was made to Kirby and to Long
Eaton. It should be noted that Scott J reached his judgment with the
benefit of argument only on behalf of the council, so it may be that matters
that he did not regard as directly material in his decision were less than
fully argued. The covenant with which he was concerned was, however, primarily that
in para 4, the covenant against trade or business — a user covenant. Having
identified that covenant, which he went on to construe so that the intended use
would involve a breach of it, he said at p1403:
Mr Woolley[‘s]… submission [for the council]… is
based — and up to a point, in my judgment, firmly based — on authority. In Kirby
v School Board for Harrogate… it was held by North J and affirmed by the
Court of Appeal that where a statutory undertaking has acquired by agreement,
not compulsory process, property for the purpose of its statutory undertaking,
a person entitled to the benefit of a restrictive covenant, which would have
been broken by use for the purpose of that statutory undertaking, could not
restrain that use. The reasoning behind this decision was that such a person —
that is to say, a person entitled to the benefit of a restrictive covenant over
the land in question — was not someone who would have been entitled to receive
notice of a proposal for compulsory acquisition, would not have been entitled
to object to a proposal for compulsory acquisition, and would, if there had
been a compulsory acquisition, have been simply entitled to claim compensation
for whatever injurious affection the new use might have had upon his land. That
being so, it was held, if the statutory undertaker acquired the land by
agreement for the statutory purpose, the person entitled to the benefit of the
restrictive covenants could not be in any better position. He could not be in a
position better than that in which he would have been had there been a
compulsory process since he would not have been entitled to the benefit of any
of the procedures of the compulsory process. Lindley LJ in the Court of Appeal
put the matter in this way, at p449:
‘It follows that the school board are perfectly
right in contending that an action for an injunction or damages is out of the
question. If the plaintiffs can make out that they are injuriously affected,
they will be entitled to compensation under section 68 of the Lands Clauses
Consolidation Act. They are not in the position of a person who is in the
enjoyment of some easement; but they have a right — a right conferred upon them
by that covenant. What is its value in money is another matter. It is quite
possible that in asking for compensation, and in putting into force the
machinery for obtaining it, their damages may be assessed at nil; but if they
can make out that they are damnified they are entitled to compensation under
section 68. That was North J’s view, and that is my view. I think that his
decision was correct, and that the appeal must be dismissed with costs.’
That passage that I have referred to was cited
with approval in a later case in the Court of Appeal, Long Eaton Recreation
Grounds Co Ltd v Midland Railway Co [1902] 2 KB 574.
Those authorities provide, in my view, clear
support for the proposition that notwithstanding that the acquisition by
Lymington Borough Council of the land in question was not affected by
compulsory process but by agreement, none the less the benefit of the
restrictive covenants cannot stand in the way of the use of those properties by
the council for the statutory purposes for which they were acquired.
In my view, the citation of that passage from the
judgment of Lindley LJ, together with the additional sentences that I have read
beyond those that I initially read when I referred to that case myself, shows
that the non-availability of injunctive relief was not dependent on entitlement
to compensation but derives from the fact that parliament has made such
provision for compensation as it thinks fit. I say this because Scott J was
careful not to find that any compensation will be payable. He merely says at
p1405D:
Mr Woolley has referred me to the various
relevant provisions of the compulsory purchase legislation. Section 68 of the
Land Clauses Consolidation Act 1845… to which reference was made in the two
cases to which I have referred, became, in effect, section 10 of the Compulsory
Purchase Act 1965. Persons entitled to the benefit of restrictive covenants
are, in my judgment, in a position, if the injurious affection necessary can
be established…’ — I emphasise those words — ‘to claim compensation under
section 10 of that Act.’
He rests for the proposition that the rule applies
in the case of acquisition by agreement rather than on the position of
covenantees as not being entitled to be treated as owners of the land. They are
therefore entitled, as I must make clear in due course, to compensation only
under section 68 of the 1845 Act and section 10 of the 1965 Act, and not under
sections 63 and 7 of those Acts. His next paragraph indeed explains this:
The Acquisition of Land (Authorisation Procedure)
Act 1946 has now replaced the Lands Clauses Consolidation Act 1845 and the
position remains, under that Act by virtue of Schedule I, paragraph 3(1)(b)
of the Act of 1946, as it stood under the Act of 1845, that it is only an
‘owner, lessee and occupier (except tenants for a month or any period less than
a month) of any land’ who is entitled to receive notice of a compulsory
purchase proposal or to object to that proposal. Accordingly, the same reasons
as inclined the Court of Appeal in the two cases I have mentioned to conclude
that persons entitled to the benefit of restrictive covenants could not resist
use of land for statutory purposes where it had been acquired under agreement
apply to that same proposition today.
In Brown v Heathlands Chadwick J
followed the decision in Kirby and in Elm Avenue, but at p136J he
asserted the reasoning that Professor Scammel has described as the linkage with
compensation. He said:
In my judgment the principle upon which the Court
of Appeal based its conclusion in Kirby is that, where the legislature
has entrusted a statutory body with functions to be discharged in the public
interest and has given that body
private rights by way of restriction affecting the land are not to be enforced
by injunction or damages in the courts because the legislature has provided for
an exclusive remedy by way of statutory compensation.
Chadwick J’s case was concerned with a proposal to
use a dwelling to house mentally-ill patients contrary to a covenant that no
building should be used otherwise than as a private dwellinghouse. That is
entirely a question of use as opposed to construction. For that reason he
considered the availability of compensation under section 10 of the Compulsory
Purchase Act 1965 for injurious affection caused by use. He said at p138J:
Section 68 of the 1845 Act and its statutory
successor, s10 of the 1965 Act, provide for compensation where a party is
injuriously affected in respect of any lands by ‘the execution of the works’.
In that context, ‘the works’ are defined in s2 of the 1845 Act to mean the
works which shall by ‘the special Act’ be authorised to be executed. That
phrase was considered by Luxmoore J in Re Simeon… He held that the
phrase ‘the execution of the works’ included ‘the exercise, that is, the
carrying out and the execution of the appropriate statutory powers’.
Scott J reached the same view in Re Elm Avenue
in the passage to which I have just referred:
‘The restrictive covenants cannot be asserted so
as to prevent the use of the land for the statutory purposes for which
it was acquired and the compensation procedure is available to compensate those
entitled to the benefit of the restrictive covenants if that use should
injuriously affect their land.’
With great respect to Chadwick J I do not, for the
reasons that I have already given, think that Scott J was, in fact, making any
judgment as to the scope of section 68. Further, I have, after not a little
hesitation (increased indeed by the fact that I discover that in a previous
case I have myself accepted his view without further consideration or, as I
recollect, argument) come to the conclusion that Chadwick J’s view as to the
scope of section 68 was wrong. I doubt that the error (as I find it to be)
invalidates his conclusion as to the availability of injunctive relief in that
case, and so my respectful disagreement is with his reasoning and not with his
decision in the case, although I suspect that he would have regarded this part
of his reasoning as essential to his decision.
Before reaching this conclusion I made enquiries of
counsel involved in the case. I am told that it was accepted on behalf of the
defendants that compensation under section 10 would be recoverable on the basis
of any injurious affection caused by the proposed use because it was hoped in
this way to avoid injunctive relief and that such concession has been
maintained in the Lands Tribunal. Thus the issue, briefly dealt with by
Chadwick J, effectively went by concession. This no doubt explains the brevity
of the reference to what Luxmoore J said in In Re Simeon, despite the
fact that reliance upon such dictum involved a departure from the
understanding of the law as set out in the text books. In In Re Simeon
Luxmoore J was asked to determine a special case from an arbitrator who had
awarded compensation under section 68 in respect of damage to the claimant’s
land by reason of the proposed use of land that he had conveyed subject to
covenants not to extract water, for such extraction. Luxmoore J said at p539:
Mr Simes further argued that no compensation can
be given in respect of these interests, because any injury caused to the
claimant will not arise from the construction of the council’s proposed works
but only from the user of those works; and in support of that argument he
relies on the decision in the Hammersmith and City Ry Co v Brand
LR 4 HL 171. The decision in that case turned on the particular phraseology of
s6 of the Railways Causes Act. In the present case, the Public Health Act,
1875, s51, authorizes the construction and maintenance of waterworks for the
supply of water. It seems to me that although the material section of the
Waterworks Clauses Act is not incorporated in the particular statutes and
orders governing the present case, the reasoning to be found in the judgment of
the Court of Appeal in Fletcher v Birkenhead Corporation [1907] 1
KB 205, 218, and especially the reasoning to be found in the judgment of
Farwell LJ, applies to the present case and distinguishes it from the decision
in the Hammersmith and City Ry Co v Brand, because the statutory
powers in this case are to construct and maintain waterworks and to supply
water. In order to supply water it is necessary to draw the water from the land
taken, and this is an execution of the works authorized. The words of s68 of
the Lands Clauses Consolidation Act are not, as in the case of s6 of the
Railways Clauses Act, ‘construction of the works’, but ‘execution of the
works’. In my judgment the latter words are wider than the former and include
the exercise, that is the carrying out and the execution of the appropriate
statutory powers.
In order to understand these words it is necessary
to look at the reasoning in Fletcher v Birkenhead Corporation [1907]
1 KB 205 to which he refers. The phrase in the Railways Act to be construed in Hammersmith
and City Railway Co v Brand (1869) LR 4 HL 171 was, as recited at
p212 of that case, ‘in exercising the power to construct the railway’. In the
Waterworks Act, with which Fletcher was concerned, the phrase was
extended to ‘the construction or maintenance of the works thereby authorised or
otherwise by the execution of the powers thereby conferred’ (see p213 of that
report). Luxmoore J was concerned with section 68 of the Lands Clauses Act,
which refers to the execution of works. But the works to be executed are
defined by the Public Health Act which, as he says, ‘authorises the
construction and maintenance of waterworks for the supply of water’. In my
judgment, when Luxmoore J says that the words ‘execution of the works’ are
wider than ‘construction’ and ‘include the exercise (that is the carrying out
and execution of the appropriate statutory powers)’ he is referring to the
powers under the Public Health Act to execute works, including within the
meaning of ‘works’ maintenance and the operation of the works for supply. He
does not say that compensation arises under section 68 for anything that is not
an execution of works, however widely that word may be construed. Mere use is
not works. However, on the reasoning in Fletcher the operation of
waterworks so as to extract water is the execution of works. If by the exercise
of the appropriate powers Luxmoore J had meant more he would, as it appears to
me, have fallen into an elementary error of statutory construction. The words
of section 68 are: ‘If any party shall be entitled to any compensation in
respect of any lands… injuriously affected by the execution of works‘,
he shall be entitled to have compensation settled. It is to be contrasted with
the words of section 63, which are: ‘In estimating the compensation to be paid
[for land taken], regard shall be had not only to the value of the land but
also to the damage, if any, to be sustained by the owner of the land by reason
of the severing or otherwise injuriously affecting such other land by the
exercise of the powers of the Act‘ (my emphasis). Thus, there are two
provisions using different words to describe the compensation payable in regard
to similar detriments arising in different circumstances. To hold that the
different words have identical meanings flies in the face of ordinary modes of
statutory construction and I do not think that that was what Luxmoore J was
intending to do.
In my judgment, the operation of a football
stadium, once constructed, could not be identified as the execution of works.
It is the use of works that have been constructed. In my judgment injurious
affection so caused would attract compensation under section 63 of the 1845 Act
or section 7 of the Act of 1965 if land was taken, but does not attract
compensation under section 68 or section 10. That is the very distinction
between the sections, which was taken by Lord Halsbury in Cowper Essex v
Acton Local Board (1889) 14 App Cas 153 to be conclusively settled when
he said at p161:
I take it that two propositions have now been
conclusively established. One is, that land taken under the powers of the Lands
Clauses Act, and applied to any use authorized by the statute, cannot by its
mere use, as distinguished from the construction of works upon it, give rise to
a claim for compensation. But a second proposition is, it appears to me, not
less conclusively established, and that is, that where part of a proprietor’s
land is taken from him, and the future use of the part so taken may damage the
remainder of the proprietor’s land, then such damage may be an injurious
affecting of the proprietor’s other lands, though it would not be an injurious
affecting of the land of neighbouring proprietors from whom nothing had been
taken for the purpose of the intended works.
In my judgment Luxmoore J’s construing of the
‘extent of works’ does not in any way affect those two propositions.
This consideration of the scope of compensation
is, in my judgment, useful, even though I do not think it is determinative of
what I may call
consideration of the proper construction of section 237 of the Town and Country
Planning Act 1990. I have discovered that in a case that I had forgotten I had
already expressed my view that the limitation of the principle in Kirby
is whether the non-enforceability of the covenant is essential to the carrying
out of the particular statutory power proposed to be exercised. The case is Cadogan
v Royal Brompton Hospital NHS Trust [1996] 2 EGLR 115*. The headnote
reads:
By an indenture dated 24 December 1912 the
predecessor in title to the plaintiff trustees gave land to the trustees of the
Chelsea Hospital for Women. The indenture was subject to two restrictive
covenants: (1) the land was not to be used for any purposes whatsoever except
those of the Chelsea Hospital for Women; and (2) no building could be erected
until the external elevations had been submitted to and approved by the
surveyor to the Cadogan Estate. Following the National Health Act 1946 the land
became vested in the Minister of Health and passed through a number of other
ministers before becoming vested in the defendant national health trust. The
plaintiffs sought declarations that the covenants were enforceable against the
defendant.
Held: The
plaintiffs are disentitled from enforcing the first covenant by an injunction,
but can restrain the defendant from erecting a building without first
submitting plans, although they may not be able to restrain the erection of a
building required for a statutory purpose. The defendant trust is a statutory
body established by the National Health Service and Community Care Act 1990
with functions to be discharged in the public interest. When the property
became vested in the present defendant with its limited powers and duties, the
restriction in the first covenant on use became one which was inconsistent with
the carrying out of its statutory function. There is a right to compensation
under section 10 of the Compulsory Purchase Act 1965 in respect of use which
applies in the case of an acquisition by vesting power of statute.
*Editor’s note: Also reported at [1996] 37 EG 142
The headnote is, I regret to say, accurate as to
what I decided in regard to compensation, although it must be said that I did
so in the absence of any argument on the matter and merely by way of acceptance
without further consideration of the authority of Chadwick J’s decision. At
p116J I said:
I do not have to refer to the authority which was
cited by Chadwick J which makes clear that compensation under section 10 may be
given in respect of use;
However, I went on to explain why I treated the
two covenants differently:
nor do I have to refer to the authority which he
cites that the restriction upon enforceability of covenants by reason of the
application of section 10, applies equally in the case of land acquired by
agreement as to land acquired by the exercise of compulsory powers. It being
accepted that the rule is of such general applicability, it appears to me it
must apply equally in a case of an acquisition by vesting by power of statute,
as it would on an acquisition by agreement. Indeed, it would seem to me a more
obvious and certain case if the purpose of the rule is to preserve the
availability of the statutory powers. The sole issue therefore appears to me to
be whether or not the particular restriction is or is not consistent with the
function for which the particular statutory body has acquired the property
and it is on the basis of that distinction that I
determined differently in respect of the covenants.
It is, in my judgment, on the basis of the
particular powers that it is to be determined whether or not the principle
enunciated in Kirby is to be applied. In construing those powers no
doubt the availability of compensation, or at least the applicability of
provision for compensation which may not, in fact, be enjoyed, must be
material.
In this case the appropriation of the land was
under the power contained in section 122(1) of the Local Government Act 1972.
That section specifically preserved third-party rights. It provided that:
a principal council may appropriate for any
purpose for which the council is authorised by this or any other enactment to
acquire land by agreement any land which belongs to the council and is no
longer required for the purpose for which it is held immediately before the
appropriation; but the appropriation of land by a council by virtue of this
subsection shall be subject to the rights of other persons in, over or in
respect of the land concerned.
What then happens to such rights when land is
appropriated for planning purposes? Section 237 of the Town and Country Planning
Act 1990 says only that certain things that might be the subject of such rights
are authorised. Section 237 says:
— (1) … the erection, construction or carrying
out, or maintenance of any building or work on land which has been acquired or
appropriated by a local authority for planning purposes (whether done by the
local authority or by a person deriving title under them) is authorised by
virtue of this section if it is done in accordance with planning permission,
notwithstanding that it involves
(a) interference with an interest or right to
which this section applies, or
(b) a breach of a restriction as to the user of
land arising by virtue of a contract.
Compensation is then given by subsection (4) as
follows:
In respect of any interference or breach in
pursuance of subsection (1), compensation —
(a) shall be payable under section 63 or 68 of
the Lands Causes Consolidation Act 1845 or under section 7 or 10 of the
Compulsory Purchase Act 1965; and
(b) shall be assessed in the same manner and
subject to the same rules as in the case of other compensation under those
sections in respect of injurious affection where —
(i) the compensation is to be estimated in
connection with a purchase under those Acts; or
(ii) the injury arises from the execution of works
on land acquired under those Acts.
Mr Hill-Smith at one stage submitted that this
might justify the assessment of compensation under section 7, even although no
land was taken from the claimant. The two cases, (i) and (ii) in subpara (b) of
subsection (4), which are the different cases for the application of section 7
or of section 10, make clear, in my judgment, that that is an impossible
construction of the section. Where no land is taken, compensation is only for
injurious affection arising from the execution of works in accordance with
section 10. To put the matter beyond doubt, section 245(4)(a) gives a special
definition to that phrase quite inconsistent with its including use. Section
245(4) says that, in construing the Compulsory Purchase Act in relation to any
of the provisions of this Part:
(a) references to the execution of the works
shall be construed as including references to any erection, construction or
carrying out of buildings or works authorised by section 237;
Mr Hill-Smith, however, adopts, by way of
argument, Professor Scammel’s view as to the proper construction of section
237. At p192 of his work Professor Scammel, first, gives an explanation as to
why the section was necessary at all:
The significant feature of this section is that
it permits a breach of covenant (or interference with an easement or profit à
prendre) either by the local authority . . . or by ‘a person
deriving title under them’ who may, of course, be a private person or body.
Apart from this extension of immunity, the section would not appear to have
been necessary since, so far as the local authority are concerned, a breach by
them in carrying out the planning purposes would be permitted under the general
principles of law referred to above.
I would comment, first, that such provision was
probably not necessary, even for persons deriving title for the reasons he
himself gives at p191, where he says:
If the public body chooses (assuming it otherwise
has power so to choose) to carry out the statutory purpose through the
instrumentality of a private individual or company to whom it grants a licence
or lease for this purpose, then the licensee or lessee will be entitled to
shelter under the umbrella of statutory immunity which is conferred upon the
public body. But if a licence or lease is granted to enable the licensee or
lessee to pursue purposes which are not within the statutory purposes, then
such a licensee or lessee is outside the shelter of the umbrella.
Second, even if that were in part the explanation
as to the introduction of this section into the Act, the provision does, in
fact, deal with the situation of the local authority and so must be taken to
have a
the person who it is proposed should use the stadium in the present case is the
second defendant, who derives title from the local authority and, on Professor
Scammel’s argument, the immunity of the second defendant must be limited to the
precise immunity granted by the section.
Professor Scammel then deals with the problem with
which I am confronted as to the scope of section 237 as follows:
The scope of the breaches permitted by section
237 of the Town and Country Planning Act 1990
The same question arises under this section as
arose under the general law in the case of non-compliance by public bodies of
restrictive covenants adversely affecting their land, namely does the permitted
non-compliance extend not only to the carrying out of works on the land
but also to a use of the land which is prohibited by the covenant. In
this connection, it is the case that the words of section 237(1) do not, in
terms, specifically refer to the ‘use’ of land following the works of construction
or, indeed, to the mere change of use without works of
construction. There is no authority specifically turning upon the construction
of this section but, for the following four reasons, it is considered that
there is little doubt but that the use of land in breach of covenant is
permitted by the section. The reasons are as follows:
(1) The word ‘maintenance’ is included in the
list of activities authorised by the subsection and, as has already been seen
above, in Fletcher v Birkenhead Corpn, this word was latched on
to by the members of the Court of Appeal, in construing a section of a
different Act but which is in pari materia with the present section, to
justify their unanimous conclusion that the section (in that case) extended to
compensation in respect of the use of the works as well as their
construction. It has to be admitted, however, that the strength of this
argument is reduced when regard is had to sections 238 and 239 of the 1990 Act
since these sections show that when this part of the Act intends to authorise
the use of land for a particular purpose then it authorises the land to
‘be used’ for such purpose. Whilst, however, no such words appear in section
237, this section alone of the group of three referred to can claim to be in
pari materia with the sections of the Acts which were construed in the Fletcher
and other cases referred to above and it is considered that this explains the
language used and its consequential meaning.
I would comment on that first reason as follows. I
have already attempted to explain how in Fletcher the phrase differs
from that in section 237 and why operation of the works to fill the reservoir
was held to be part of the maintenance. I think that, in construing section
237, the contrast with sections 238 and 239 (and I would add the avoidance of
the use of the word ‘development’ which goes beyond mere works) support the
opposite construction.
The professor goes on with a second point:
(2) The activities referred to in the section are
permitted notwithstanding that carrying them out ‘involves’ a breach of
covenant. In the Shorter Oxford Dictionary the word ‘involve’
comprehends ‘To include, to contain, imply; esp to contain implicitly’.
The argument therefore is that since the works of erection or construction
pursuant to planning permission ‘imply’ the post-construction use thereof, the
erection or construction of the works ‘involves’ a breach of covenant which
includes such subsequent use.
This argument, if I have understood it correctly,
is, in my judgment, misconceived. The problem is the definition of ‘work’. It
may be authorised, even if it necessarily involves (in the sense of implying) a
breach of a covenant against use. But that does not mean that the subsequent
use is thereby authorised by an authorisation of the work.
His third point is this:
(3) If, after construction, the works constructed
could not be used without fear of an injunction, the whole purpose of sections
226 (acquisition of land for planning purposes), 232 (appropriation of land for
planning purposes) and 237 of the Act would be nullified and, in the absence of
clear words producing this result, section 237 must be construed to avoid that
result.
I think that this reverses the usual mode of
construction of the statute which must, on my analysis, involve the
appropriation of third-party rights without compensation and (even if I were
wrong about that) with only restricted compensation. The degree to which the
purpose of the Act would be nullified is in any case doubtful. The local
authority can avoid the problem by the purchase of the dominant tenant and
would be empowered to do so if they thought it necessary for planning purposes.
Availability of that power, or the possibility of application to the Lands
Tribunal under section 84 of the Law of Property Act 1925 would, of course, be
a basis upon which agreement for the release of a restrictive covenant might
well be negotiated. Impeding a ‘public purpose’ is specifically a ground for
modification of a covenant under section 84(1)(aa).
Professor Scammel’s fourth point is:
(4) The ‘planning purposes’ referred to in
section 226(1) of the Act (as so designated — rather than defined — by section
246(1)(a), include any ‘development’ and also the use of land for a purpose
which it is necessary to achieve in the interests of the proper planning of an
area in which the land is situated. Either of these purposes may involve
nothing more than a material change of use of land. An interpretation of
section 237 which would confer immunity in respect of some planning purposes
(construction) but not others (use and change of use) would not be consistent
with the generality of the reference to planning purposes in the section.
In my judgment, it is precisely the contrast
between the use of the word ‘development’ in those sections, and its avoidance
in the description of what is authorised in section 237, that leads to the
opposite conclusion. Indeed, it is to be noted that section 246, as the
interpretation section, gives in subsection (3) an extended meaning to ‘use’ in
sections 238, 239 and 241, but in spite of reference to section 237 in
subsection (2) gives no such extended meaning to ‘works’ in section 237 in
order to reverse the effect of section 245(4)(a), to which I have already
referred.
Mr Hill-Smith also referred me to a number of
cases where it has been assumed that section 237 would have the results
asserted by Professor Scammel, and for this reason those wishing to avoid that
result have sought to attack the decision rather than the effect of section 237
— that is to say the decision to appropriate rather than the effect of the
appropriation. I do not think I can draw more from these cases than that I
should not lightly reject the arguments based on Professor Scammel’s persuasive
work. Nor do I. I have considered carefully the reasoning of Dyson J in R
v City of London Council, ex parte Master Governors and Commonality of the
Mystery of the Barbers of London [1996] 2 EGLR 128*. He there decided that
section 237 does not cease to apply once the original purpose for which the
authority required the land has been achieved. It is available to authorise
further works for which planning permission is duly granted. He categorised
this as a wider interpretation of the section and said at p129L:
There is nothing surprising about the wider
interpretation. The statutory objective which underlies section 237 of the 1990
Act is that, provided that work is done in accordance with planning permission,
and subject to payment of compensation, a local authority should be permitted
to develop their land in the manner in which they, acting bona fide, considers
will best serve the public interest. To that end, it is recognised that a local
authority should be permitted to interfere with third party rights. A balance
has to be struck between giving local authorities freedom to develop land held
for planning purposes, and the need to protect the interests of third parties
whose rights are interfered with by local authority development. Section 237(1)
is the result of that balancing exercise. Parliament has decided to give local
authorities the right to develop their land and to interfere with third party
rights, but on the basis that work is done in accordance with planning
permission (with the protection inherent in the planning process), and that
third parties affected are entitled to compensation under section 237(4).
*Editor’s note: Also reported at [1996] 42 EG 156
I agree with all of that. The question, however,
is in what way the balance has been struck in regard to development consisting
of use of the works in non-compliance with covenant, as opposed to
construction. In that case the works proposed would have interfered with the
right of light, and compensation would indeed have been available. Dyson J made
clear in dealing with the submission based on Tate & Lyle Food &
Distribution Ltd v Greater London Council [1983] 2 AC 509, that it
is the words of the section that led him to the conclusion that he reached.
Likewise, I have attempted to construe the
For these reasons I construe section 237 as not
authorising use in contravention of the restrictive covenants as I have
construed them in this case. Since what I have called the ‘Kirby
principle’ is, in my judgment, to be limited to the specific powers in the Act,
I do not think that such authority can be relied upon to give powers to
override the covenant in order to carry out what is not authorised by the
powers. I accept, of course, that the power of compulsory purchase in section
226 of the Town and Country Planning Act is in the widest terms for securing
development which would therefore include use. The effect of section 237,
however, is, in my judgment, to set limits upon the exercise of such powers
where they involve interference with third party rights. I would therefore make
the declarations sought in paras 1 and 2 of the amended originating summons.
Declarations as sought.